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EV/EBITDA is one of the most widely used valuation multiples for comparing companies, especially across different capital structures and tax situations — it's a common alternative to the P/E ratio in M&A and equity research contexts.
How it works
Enter enterprise value and EBITDA, and the calculator applies EV/EBITDA = Enterprise Value ÷ EBITDA.
- Enter enterprise value ($).
- Enter eBITDA ($).
- Click Calculate to see your results.
Examples
A moderate valuation multiple
A company with a $12,000,000 enterprise value and $2,000,000 of EBITDA trades at an EV/EBITDA multiple of 6.0.
Who should use it
- M&A valuation and deal comparison.
- Investment analysis and equity research.
Industry applications
- Investment banking and M&A analysis
- Investment analysis and equity research
Advantages
- Widely used, standard multiple for comparing companies across different capital structures.
- Less distorted by financing and tax differences than earnings-based multiples.
Limitations
- Ignores capital expenditure needs, which EBITDA specifically excludes — can overstate value for capital-intensive businesses.
Common mistakes to avoid
- Comparing EV/EBITDA multiples across very different industries without accounting for typical multiple differences.
- Confusing EV/EBITDA with the P/E ratio — they use different numerators (total enterprise value vs. equity/share price) and denominators (EBITDA vs. net income/EPS).
Best practices
- Compare EV/EBITDA against similar companies in the same industry and growth stage.
- Use the Enterprise Value Calculator first if you need to compute EV from its underlying components.
Tips
- Use the Enterprise Value Calculator and EBITDA Margin Calculator together with this one for a complete valuation workflow from a company's underlying financials.